Since the release of Bitcoin in 2009, blockchain projects increased exponentially to the order oftens of thousands. Different projects have different value propositions, suggesting that the futurewill be multi-chain and that inter-chain communication will be crucial to establish collaborationsand leveraging each other strengths.
Polkadot 1.0
Polkadot 1.0 reflects the status of Polkadot in 2023 at time of the release of thePolkadot runtime v1.0.0. This sectionsfocuses on Polkadot 1.0 and some philosophical digressions about network resilience and blockspace.
Polkadot is a Layer-0 blockchain that brings to the multi-chain vision the following innovations andinitiatives:
- Application-specific Layer-1 (L1) blockchains (or parachains). Polkadot is a sharded networkwhere transactions are processed in parallel with each shard. Polkadot shards can be heterogenous(i.e. they do not need the same state transition function as in the proposed Ethereum shardingarchitecture). This allows to build L1 chains designed explicitly around their application andvalue proposition.
- Shared security and financial scalability of L1 chains. Any L1 chain attached to a Polkadotcore can benefit from Polkadot shared security model. This means the PolkadotNominated-Proof-of-Stake (NPoS) mechanism along with its consensus mechanism, will secure L1chains out-of-the-box without having to bootstrap security on their own.
- Secure interoperability. Any L1 chain attached to Polkadot (as well as L2 chains built on topof them) can benefit from Polkadot's native interoperability and will thus be able to communicateand exchange value and information with other parachains.
- Truly resilient infrastructure. This is achieved by keeping the network decentralized withoutcompromising scalability and throughput and through on-chain treasury funds that can be accessedthrough governance referendum. Those funds guarantee constant sponsorship for events, initiatives,educational material, education, software development, etc.
- Fast development and deployment of L1 chains. This is achieved through the modular andflexible Polkadot SDK Substrate.
- Fostering next-gen of Web3 core developers. This is achieved through different initiativessuch as:
- The Polkadot Blockchain Academy
- Polkadot Alpha Program
- Polkadot Developer Heroes Program
- Edx Courses
- Rust and Substrate Courses (coming soon)
Polkadot's Representation
Polkadot has a Relay Chain acting as the main chain of the system. The Polkadot relay chain has beenrepresented as a ring surrounded by multiple parachains attached to it. Based on Polkadot's design,as long as a chain's logic can compile to Wasm and adheres to the Relay Chain API, then it canconnect to the Polkadot network as a parachain.
Parachains construct and propose blocks to validators on the Relay Chain, where the blocks undergorigorous availability and validity checks before beingadded to the finalized chain. As the Relay Chain provides the security guarantees,collators - full nodes of these parachains - don't have any securityresponsibilities, and thus do not require a robust incentive system. This is how the entire networkstays up to date with the many transactions that take place.
The Cross-Consensus Messaging Format (XCM) allows parachains to sendmessages of any type to each other. The shared security and validation logic of the Relay Chainprovide the environment for trust-free message passing that opens up true interoperability.
In order to interact with chains that want to use their own finalization process (e.g. Bitcoin),Polkadot has bridge parachains that offer two-way compatibility,meaning that transactions can be made between different parachains.
Polkadot's Additional Functionalities
The Polkadot relay-chain also manges crowdloans,auctions, staking,accounts, balances,and governance. Parachain slots or cores are leased in 6-monthchunks for a maximum of two years, and crowdloans allow users to trustlessly loan funds to teams forlease deposits in exchange for pre-sale tokens. There is no other way you could use Polkadot 1.0.
Polkadot's Resilience
Decentralization is a crucial aspect of blockchain networks, but there is a trade-off between:
- having an over-decentralized network that struggles to reach consensus and consumes a lot ofenergy to operate, and
- having a network that reaches consensus fast at the expense of being centralized, making ittrivial to manipulate or attack.
Ideally, a network should be decentralized "enough" to make it practically impossible for someone toexert manipulative or malicious influence on the network. So, decentralization is a tool while thegoal is resilience, which is achieved by additionally providing on-chain treasury and governancemechanism allowing continuous incentives for the network's participants without relying onintermediaries or centralized entities.
Currently, Polkadot 1.0 achieve resilience through the following strategies:
- Nominated Proof of Staking (NPoS) where the stake per validator is maximized and evenlydistributed across validators.
- The 1KV programe aims to incentivize new operators to become networkparticipants and further increase physical (how many validator nodes per service provider) andsocial decentralization (how many validator nodes per operator). Those can be explored with thePolkawatch App.
- An on-chain treasury and governance (see: OpenGov whereevery decision goes through public referenda and any token holder can cast a vote.
Polkadot's Blockspace
The design and realization of Polkadot 1.0 allowed its creators to enable commoditization ofblockspace.
A blockchain is a way to store data. The storage unit is the block, and once a block is finalizedonto the chain, it is practically impossible to modify the data within that block. In addition tobeing tamper-proof, public permissionless blockchains like Polkadot store data that are visible toeverybody (i.e. public), and anybody can become a network participant permissionlessly.
Blockspace is the capacity of a blockchain to finalize and commit operations. It represents ablockchain's security, computing, and storage capability as an end product. Blockspace produced bydifferent blockchains can vary in security, flexibility, and availability.
- Security, intended as how secure the blockspace is. In Proof-of-Stake (PoS) networks, this isdirectly related to how much stake is locked on validator nodes, how much variance in stake thereis between validators (i.e. how easy it is to attack a single validator), and how many validatorsthere are securing the network (i.e. how easy it is for colluding validators to exert influence onthe network). Additionally, it is also important to look at how many validators are owned bysingle operators (this will determine the degree of social centralization of the network), and howmany validators run on the same service provider (this will determine the degree of physicalcentralization of the network).
- Flexibility, intended as how flexible the blockspace is, what can be done with it, and whattype of data can be stored. Data quality plays an important role depending on the type of network.One might avoid having situations in which poor quality data flood blockspace hindering the promptexecution of vital processes.
- Availability, intended as how available blockspace is and how difficult it is to access it. Itshould not be too difficult to get your hands on it so that any business model can thrive usingit. Ideally, a marketplace must drive the blockspace price based on demand, with secondary marketoptions to ensure the usage of "second-hand" blockspace.
Polkadot has been designed around those core blockspace principles. However, its design can befurther improved such that the tasks which are currently managed on the relay chain, such asbalances transfers, staking, and governance, can be delegated tosystem parachains to increase flexibility and to focus the use ofthe relay-chain to provide shared security and interoperability. Blockspace is only accessiblethrough slot auctions, but an auction winner has access to a "freighter of blocks" regardless it isneeded or not. This creates high entry barriers and it can lead to waste of energy and resources.
For more information about blockspace see this interview with RobertHabermeier as well as this article byhim.
A Perspective Shift: Upcoming Polkadot Features
As with many other projects before Polkadot, at some point in time after achieving theinitially-planned goals, a perspective shift allows you to understand better what your project isabout and what you actually have built. This allows you to "run the extra mile" and achieve morethan what was originally planned.
The quote below by Marcel Proust must remind us thatsometimes a perspective shift is crucial in understanding the world, and perhaps it is moreimportant than seeing more of the world.
The only true voyage of discovery, the only fountain of Eternal Youth, would be not to visitstrange lands but to possess other eyes.
Thus, if we start to see Polkadot with other eyes we can truly envision its potential and what itcould become.
Polkadot is perfecting its implementation through RFCsto continue being a decentralized, secure, ubiquitous computing engine to power the next generationof Web3 applications.
